MINISTRY OF LANDS PRESS RELEASE (29/4/14) FIRST RENT REVIEW SINCE INDEPENDENCE TO BE UNDERTAKEN BY MINISTRY OF LANDS “Today’s rents in Port Vila are less than 1% of the value of the land” “Today I give notice that the Vanuatu Government will initiate the first ever rent review of state land leases in Port Vila since independence”, stated the Minister of Lands Ralph Regenvanu. “This rent review is urgently needed as we have data that shows that most rental payments are at less than 1 per cent of the value of urban state land. This is estimated to be a loss of around 200 million vatu income each year to the Government from Port Vila leases alone, and must be addressed.” The Department of Lands on behalf of the Government is about to undertake the first-ever rent review undertaken by the Government as the lessor of public land since Independence in 1980, commencing in Port Vila. In accordance with section 39(1)(b) of the Land Leases Act [CAP 163], notices have to be served by 30th April 2014 on almost all 4,103 lessees of public land in Port Vila. Once the rent review in Port Vila is completed, the Department will undertake the rent review in Luganville, probably towards the end of this year or at the beginning of next year. As a result of the rent review in Port Vila alone, Government revenue from land rent is expected to increase by over 200 million vatu in 2015. Today’s rents in Port Vila are less than 1% of the market value of the leased land. Since 1980, land values have consistently increased and capital gains have been very good for some land dealers who bought and sold land over the 33 years since independence. But the lessor of public land under the Constitution and the law - the government of Vanuatu - has not systematically reviewed the land rent being paid to it in all this time. As a result, the Vanuatu government has the lowest land rents on record. Across the Pacific, Solomon Islands has a range from 0.5% to 3% of the market value of the land as annual rent. At the high end in the Pacific, Fiji levies 2.5% to 6% depending on whether the land is native land or crown land. At most, the Vanuatu government charges 0.95% of the market value of the land as annual rent. A recent study by the Former Governor of the Reserve Bank, Odo Tevi, has shown that compared to GDP, the governments of Vanuatu and Tonga are collecting the lowest revenue as a percentage of their respective GDP’s. Whereas Tuvalu’s revenue is over 80% of its GDP, the Vanuatu government only collects around 23% of its GDP in revenue from land rent. The land rent review should not be confused with overdue land rent - lessees who have not paid their land rent to the government for many years must still pay their overdue rents, and the Government reserves the right to forfeit leases for which no land rent has been paid for many years. The rent review notice will be sent to the lessees in Port Vila who have not had their rents reviewed in the last five years. This means in effect that any leases over public land issued in the last 5 years will not be subject to the rent review. Notices issued will include details for the new rental amount, which can they be accepted by lessees, or a counter-offer made in accordance with the provisions outlined in the Act. Where contested, all final determinations of rent will be made by the Valuer General and will be based on the market value of land. The new land rent invoices for Port Vila will be issued in July 2014. The proposed new rents will use 65% of the market value as the base value. The rental rate will be increase from 0.95% to 1% of the base value. So if a piece of land is valued at 1,000,000 vatu, the base value for the purpose of calculating the new rent will be 650,000 vatu. One percent of the base value will be 6,500 vatu, which will be land rent payable. However, the final rent will be set by the Valuer General. Later this year also, the Minister of Lands will be undertaking a rent review of all rural leases for which the Minister is acting as lessor on behalf of disputing parties. Almost all of these rural leases have also never had their rents reviewed since independence and as a result lessees on these titles could be paying considerably less into the Custom Owner Trust Account than they should be paying based on the real value of the land. For further queries contact the Lands Department through the Acting Director Mr Paul Gambetta on telephone 5334540 or email [email protected].
Posted on: Tue, 29 Apr 2014 08:49:26 +0000
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